IB margin

[TGM]

Quote from gowron8:

Over all I applaud IB for its Forex product and am particularly impressed that improvements are continually being made. However, I do agree with GWAC. Margins really should be lower...at least for intra-day trades.

I asked before. There is a particular reason IB charges 2%. 3% for yen is way high and they understand that. Hopefully, we will see the day when we can get 1% for US trading hours in some of the Majors. But overall the way they do margin is just like it gets done in interbank.

IBj is working on a position tracking deal for Ib TWS and I hope he gets it done soon!

 

[gwac]

Do i not have to convert my cad to usd then....

Quote from Hoi:

Yes that is it.
When two non-base currencies are involved, then there are 2 times an foreign exposure against your base-currency (CAD). In which case IB calculates 2 times margin.

But you can solve it by changing your base-currency to USD (instead of CAD)...which I advise when you only trade Forex at IB and when you mostly trade pairs without CAD involved.
In such a case only one time Margin is calculated (because only one non-base currency is involved).

Changing your base-currency can be done in Account-management.

 

[Hoi]

Quote from gwac:

Do i not have to convert my cad to usd then....

If not, then you will immediately have a USD.CAD position.
I don't know if that is the position you want to hold.

 

[gwac]

Why would I have a position, when I close the account
I want C$ since I live in Cad. The only thing is would they
need margin in US$ for every trade.....

The other thing is I have accumulated profits in US$$

Quote from Hoi:

If not, then you will immediately have a USD.CAD position.
I don't know if that is the position you want to hold.

 

[Hoi]

Quote from gwac:

Why would I have a position, when I close the account
I want C$ since I live in Cad. The only thing is would they
need margin in US$ for every trade.....

The other thing is I have accumulated profits in US$$

Understand that when you have a IB universal Account it does not matter what you trade or in what country you live....if you trade a DAX-future, you will get Euro's in your account (P&L and commission).
The same as you trade Forex, you are just MOVING currencies, between your base-currency and foreign currencies....If your base-currency is set to USD, then all other currencies are foreign. It does not matter if that is EUR or CAD.
Margin is only calculated for foreign-currencies.....Your started this thread with a question why your USD.GBP trade took 4% instead of 2%...that is because both are FOREIGN to your CAD (base)...if you want 2% then the solution is to take USD as base....if you don't want that...well then you have to accept 4% at IB (or trade FX-futures on Globex, which are better anyway).

Learn to THINK in budgets, not in what country you live.

If you want to keep as much of your account in CAD then you can, but when USD is your base it is a position in foreign-curr, so it will take 2% Margin....
Also the Interest might be something to consider. as USD interest is currently higher than CAD it is actually GOOD to have USD as your base and keep all your money it USD (until you close your account).

PS: I have one of my accounts in USD, while I live in The Netherlands (in Euro).

 

[gwac]

I see what you are saying, but I have to look at what currency
i will eventually take out of this account. That is CAD, I really
do not want much USD in this account because I think
USD/CAD is going to par. So I do not want to switch
the actually money in the account to USD and then
get stuck losing money when I close out the account and
lose on the exchange if CAD continues to appreciate.


Like you said I can switch it to USD, then take USD/CAD
position that I keep to hedge the exposure to me that
is created by being a canadian with a usd $ account.



Thanks

Quote from Hoi:

Understand that when you have a IB universal Account it does not matter what you trade or in what country you live....if you trade a DAX-future, you will get Euro's in your account (P&L and commission).
The same as you trade Forex, you are just MOVING currencies, between your base-currency and foreign currencies....If your base-currency is set to USD, then all other currencies are foreign. It does not matter if that is EUR or CAD.
Margin is only calculated for foreign-currencies.....Your started this thread with a question why your USD.GBP trade took 4% instead of 2%...that is because both are FOREIGN to your CAD (base)...if you want 2% then the solution is to take USD as base....if you don't want that...well then you have to accept 4% at IB (or trade FX-futures on Globex, which are better anyway).

Learn to THINK in budgets, not in what country you live.

If you want to keep as much of your account in CAD then you can, but when USD is your base it is a position in foreign-curr, so it will take 2% Margin....
Also the Interest might be something to consider. as USD interest is currently higher than CAD it is actually GOOD to have USD as your base and keep all your money it USD (until you close your account).

PS: I have one of my accounts in USD, while I live in The Netherlands (in Euro).

 

[KS96]

Quote from TGM:

I have not been wacked 3% over interest rates -.

Strange that you haven't. I am not talking about
a single month event. It had been happening every
single month for half a year. I was trading the minimum
size; the deal gets better for larger accounts.

Also, setting the base currency to USD doesn't help
at all for amounts less than 10000 USD
(...or any equivalent amount in other currency.
You don't receive any interest at all!!!!)
See:

http://www.interactivebrokers.com/en/accounts/fees/interest.php?ib_entity=uk#credit

Simply, for small forex accounts, IB is one of the worse
deals out there.

 

[IBj]

Quote from gwac:

Why would I have a position, when I close the account
I want C$ since I live in Cad. The only thing is would they
need margin in US$ for every trade.....

The other thing is I have accumulated profits in US$$

hoi correctly suggests that you can switch base currencies to lower your overall margin burden. No real currency conversion is required or occurs.

The notion of base currency is more tied to the banking functionality than to trading. It expresses the accounts preferred expression of "wealth" and the amount that can be ultimately withdrawn in that currency. If you are a Canadian and deposited CAD orginally but now have more assets invested in USD, then you will generally have a lower margin burden by viewing your wealth in USD. You can still withdraw CAD, etc but your [larger] USD positions will not have a margin associated with them. Statements, btw, are summarized in base currency .

At the end, you can switch back to CAD as base, should you wish.

Note that selection of base currency is just a choice as to how you view your wealth. It doesnt change your wealth, nor does it change your true market risk. It does change the amount IB reserves as margin against what we allow you to withdraw or use for other investments.

On a on unrelated topic to gwac's question but it came up in this thread: JPY margin should now be 2%, down from 3.3%

 

[TGM]

Quote from IBj:



On a on unrelated topic to gwac's question but it came up in this thread: JPY margin should now be 2%, down from 3.3%

GOOD JOB!

Now keep working and bring out something so I can track positions more easily!

cheers and thanks for listening --that is why I like IB!

 

[gwac]

thanks ibj